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Health and Wellness Market Performance 2015: What’s New?

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Is organic still selling? Does the “natural” trend mean that fortified/functional food is now totally passé? Which gluten-free categories are enjoying the most buoyant growth? Why are consumers turning their noses up at better for you (BFY) offerings? To mark the release of Euromonitor International’s latest health and wellness data, we answer these questions and some others besides.

Naturally healthy wins out

Perceived healthier than highly refined foods, the naturally healthy category, valued globally at US$276.0 billion in 2015, is the real winner in health and wellness 2015. It is the largest health and wellness category, exceeding that of fortified/functional products by almost US$20.0 billion, and also beating it in terms of growth dynamism (based on fixed US$2015 exchange rates and constant prices).

Naturally healthy products like oatmeal, spring water, 100% juice and nut snacks are among the ultimate clean label foods, which, in the eyes of consumers, have not been toyed with and can therefore be trusted, even if they do not sport an organic label.

Naturally healthy is also a prime area for innovation, with new superfoods and beverages continuously hitting retailer shelves. Further growth of over US$69.2 billion at constant 2015 prices is expected by 2020.

Fortified/functional food as relevant as ever

Despite what some might expect, owing to the concerted drive towards clean labels and natural products, fortified/functional offerings are doing much more than just holding their ground. They are showing healthy growth, in fact.

Particularly in demand right now are extra protein and energy. Euromonitor International’s latest data identify energy boosting as the most dynamic health and wellness positioning platform, with constant value growth of 8% in 2015. Formerly targeted primarily at young males, manufacturers have been working hard to broaden their audiences by launching products that are more appealing and more relevant to women and mature consumers, for instance. After all, the desire for a timely energy boost is a universal one.

Probiotic yoghurt is also going from strength to strength. Although growth rates in Western Europe and the US are no longer as dynamic as they were a decade ago, on a global level, probiotics are still driving yoghurt growth. The world’s top five growth markets in terms of value in 2015 are India, China, Venezuela, Saudi Arabia and Norway.

In China, for example, probiotic yoghurt registered a succulent 31% value increase in 2015. Owing to being enthusiastically promoted on the basis of diverse health benefits, such as life span extension, as well as being attractively packaged, Chinese consumers are drawn to purchasing probiotic yoghurt as gifts for friends or relatives. One factor that may potentially constrain probiotic yoghurt growth in the country is that Chinese consumers tend to avoid chilled products for breakfast, believing them to have a negative impact on their digestion when consumed early in the day.

Over the forecast period, China is also the country where fortified/functional offerings are predicted to make the most gains, with a constant 2015 CAGR of 12%. Furthermore, it turns out that all the countries but Hong Kong with a forecast CAGR above 3.5% are emerging economies.

Indulgence and convenience drive gluten-free growth

The food intolerance positioning platform was almost on par with that of energy boosting in terms of value growth in 2015, at nearly 8%. Gluten-free eating is taking the world by storm, with gluten-free foods having managed to establish themselves as differentiated food offerings in modern grocery retailers.

Value sales of bread and pasta are falling globally, while gluten-free versions, on the other hand, are still making impressive gains. Gluten-free bread alone is valued at US$1.0 billion globally this year. Gluten-free food may have been less dynamic in 2015 compared to previous years within the review period, but it nevertheless managed to garner a 9.6% constant value rise. Gluten-free cakes led the pack, with a 14% value gain, demonstrating just how strongly consumers hanker for a bit of indulgence when they are on an exclusion diet.

Convenience is another major driver. Gluten-free ready meals, for instance – a new category broken out in our data for the first time this year – grew from US$287 million to US$406 million globally between 2010 and 2015. It is not just rice-based Asian-style dishes, which are ever more frequently promoted as gluten-free options, but traditional “gluten-bomb” comfort foods are being re-hashed as well. In July 2015, for example, Canadian manufacturer Daiya introduced its mac and cheese offering Cheezy Mac, which, besides being gluten free, is also devoid of dairy and soy.

Organic keeps on delivering a steadfast growth performance

To some, it might come as a surprise to hear just how well organic is doing. With 4.5% value growth in 2015, it outperformed overall health and wellness food and beverages’ value growth by two percentage points, reaching US$34.5 billion globally.

Western Europe delivered a steady 4% increase, which was in line with the review period performance, as was North America’s 3% rise.  Withing organic packaged food in Western Europe, perhaps surprisingly to some, with a constant CAGR of 11% over 2010-2015 in Italy showed second highest growth rate after Turkey. The global top 10 leader board is replete with emerging economies, though, including China, Argentina, Turkey, Morocco, Colombia, India and Romania.

Organic is very much in sync with the natural and clean label trend, and so unlikely to fall out of favour with consumers in the foreseeable future.

BFY: A victim of clean label and reformulation trends

The better for you (BFY) category, which comprises food and beverages reduced in sugar, fat, salt and/or carbohydrates, suffered over the review period. Instead of a glimmer of improvement, 2015 brought yet another 1% drop in global value sales.

The reasons for BFY’s malaise are two-fold: For one, the clean label trend is flexing its muscles. When fat, sugar, salt and carbohydrates are removed from a food and/or beverage, some kind of substitution is usually required. These stand-ins can be rather chemical-sounding, which puts consumers off.

The other main reason is the food industry’s ongoing efforts at reformulation to make product portfolios healthier, rather than developing and promoting BFY brand extensions.

This tandem of factors helps to explain the apparent paradox as to why reduced sugar breakfast cereals contracted by 19% in value in 2015. This was also a year when sugar came under heavy fire once more after the WHO issued a new guideline in March stating that adults and children ought to reduce their intake of free sugars to no more than 10% of total energy intake, and ideally to less than 5% (six teaspoons). Over the review period, global value sales of reduced sugar breakfast cereals halved from US$181 million in 2010 to US$94 million in 2015.

Among the biggest losers are reduced sugar versions of Kellogg’s Frosties and Kellogg’s Fruit Loops, registering 60% and 92% global value sales drops, respectively, between 2010 and 2015. This illustrates that consumers are more inclined to switch to a different breakfast offering altogether rather than stand by an “adulterated” version of an “unhealthy” product.

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